I would go for the 4350 if I were you. According to this review:AnandTech: ATI Radeon HD 4350 and 4550: Great HTPC Solutions
It says that while the 4350 and the 4550 both support full hardware decoding of a 1080p video the 4350 can not handle 2 simultaneous video streams. So if you want to use picture in picture the second video stream will have to be handled by your CPU.

I would go for the 4350 if I were you. According to this review:AnandTech: ATI Radeon HD 4350 and 4550: Great HTPC Solutions
It says that while the 4350 and the 4550 both support full hardware decoding of a 1080p video the 4350 can not handle 2 simultaneous video streams. So if you want to use picture in picture the second video stream will have to be handled by your CPU.

And, no a x16 PCIe 1.0 slot will not bottleneck a 4350 or a 4550.

wait, you're confusing me... you tell me to go for the 4350, but then tell me it's at a disadvantage to the 4550...

It depends what you're going to be using the card for. The only real place that the 4550 has an advantage with is with picture in picture (PiP). With some of the new blu-ray titles coming out you can have a little box in the corner of the screen with a different video. Normally this is used for the director's commentary or something equally silly. If you think that you are going to take advantage of that then you should probably buy the 4550. If you don't use PiP then I would recommend the 4530.

Reading the wikipedia page on PiP I notice that it says that most new blu-ray titles use Standard Definition video for the extra content. So it seems that the 4550 would be a bit overkill even if you used PiP. Because if there is only one HD stream (the actual movie) the 4350 would decode that and then your processor can easily handle the secondary SD stream.

I've decided that I may not want to keep with the stock heatsink that I have on my E4600 downstairs (which is the chip I'm putting in my HTPC). The case is going to be small, so I want something with a little more cooling power, but that fits in such a small case. I've decided on the 'Zalman CNPS8700.' It's made for low-profile cases like the Minuet, and looks like it'll do a good job of cooling my chip amidst the warm atmosphere that'll be inside my HTPC...